with tariffs on imports. That’s neither feasible...
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LIAR !
It worked from 1790ish to 1913 .
.
Evil politicians use the income tax code to reward, punish, and control. They’ll never give that up.
As much as I’d love to have The Fair Tax, it faces a steep uphill battle.
Everyone should pay tax. Maybe 1% to 100K tied to increased tariffs on Chinese products and 100% tariff on H1B and all non-citizen labor. Then, 5% to 250K, 10% to $1M, and 25% thereafter. No exemptions. Make it simple and put the whole tax preparer industry out of business.
Anyone who understand how the states have set up sales taxes KNOWS that with Congress in charge a national sales tax will have even more ifs, ands, and buts about it, including exclusions, to the point of making it as NOT “fair” as are most state sales taxes, which in fact are NOT single rates applied universally to every sales there is.
Like tarriffs there is nothing that will be “fair” about it, and as a sales tax it will be a regressive tax, meaning the portion of one’s income that through purchases will pay the tax increases the lower one’s income is and decreases the higher the income is, because the lower one’s income is the less one has income left over for savings, investments and other things that are not subject to the sales tax, and the higher one’s income is the larger is the portion of the income that is availble for things that are not subject to a sales tax.
I continue to press for a national universal one rate flat income tax with no deductions, no exclusions, no exemptions and no tax credits, regardless of source(s) of income. Just one univeral flat tax income everyone pays.
Friedman eloquently argued for a Flat Tax of 17%. Everyone paid the same rate; no brackets, no deductions, no exceptions. He took that stance because, under those circumstances, income tax has no impact on the allocation of resources. That is, expenditures and investment flow to their most productive uses. Now, because of the Tax Code, resources are allocated according to the after tax returns, which ends up subsidizing gov't-favored industries (e.g., electric vehicles).
I like the flat tax. After all, at the present time, 51% of the US population pay no income taxes. To me, if you pay no federal income taxes, you shouldn't be able to vote in federal elections. After all, no skin in the game, why should you have a say in how the money is spent?
Having paid income taxes throughout my working life, I’m not very enthusiastic about the prospect of paying increased sales taxes now that I’m retired and trying to live on a fixed income.
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“That tax became a fixture in 1913 when Congress ratified the 16th Amendment. “
They wuz bought off.
“The proposed Fair Tax Act (H.R. 25/S. 18) would apply a tax, once, at the point of purchase on all new goods and services for personal consumption. The proposal also specified a monthly welfare payment for low-income earners to offset the regressive tax impact.”
[Sort of like the Oregon $750 we attacked the other day.]
“As defined in the proposed legislation, the initial sales tax rate is 30% (i.e. a purchase of $100 would incur a sales tax of $30, resulting in a total price to the consumer of $130). Advocates promote this as a 23% tax inclusive rate based on the total amount paid including the tax, which is the method currently used to calculate income tax liability.”
“Critics contend that a consumption tax of this size would be extremely difficult to collect, would lead to pervasive tax evasion, and raise less revenue than the current tax system, leading to an increased budget deficit. The proposed Fairtax might cause removal of tax deduction incentives, transition effects on after-tax savings, incentives on credit use and the loss of tax advantages to state and local bonds. It also includes a sunset clause if the 16th Amendment to the US Constitution is not repealed within seven years of its enactment.”
“Proposed 2015 FairTax Prebate Schedule”
“Two adult household”
“Family Size - Annual Consumption Allowance - Annual Prebate
- Monthly Prebate”
“and 2 children $31,860 $7,328 $611”
https://en.wikipedia.org/wiki/FairTax
[Prebates are more likely to result in pot or crack vapors than SNAP benefits or Section 8 money would.]
Anything that might make any lower income person pay more in federal taxation is a circular file item.
Welfare need (and federal welfare spending) can be decreased and household income increased by getting rid of overtime laws (which are obsolete since most employers refuse to pay time & half) and the PPACA hour-based employment barrier (by allowing individuals to request a personal choice override after at least two weeks of employment).
The Fairtax was written for businesses collecting and remitting the tax, not the consumer paying the tax.
The Fairtax requires businesses to remit 23% of the gross payments received. Gross payment received includes all other taxes fee etc.
For a business to remit 23% of their gross they would have to charge 30% sales tax even on some labor.
There would also be a 30% tax on ALL government employee wages, salaries and benefits.
Mr. Krugman, could you explain the impact of the Fair Tax for our viewers?
It’s very simple, the well-to-do would pay less in federal taxation by having others, mainly the middle class, pay more.
Mr. Reich?
Paul is 100% correct.
Think 30% Value-Added Tax, with a universal basic income “prebate” feature.
No “income” tax can ever be fair because ...
1. Unless you make enough to hire tax attorneys who sniff out tax havens for you, the only way to lessen your tax burden is to earn less money. Which means that in the lean years the lower and middle classes get screwed.
2. A tax on income is indentured servitude by another name.
Tax Foundation (dot-org) used to calculate “Tax Freedom Day,” the day before which all the average individuals wages and earnings were sucked up by the government. In 2019 the date was 16 April. Since then they haven’t published the date (I wonder why?) but in 2019 you worked for the gummint for 106 days, 29% of the year, before you cleared a profit
The wealthy always can be counted on to spend on luxury goods, else there’s not much benefit to being wealthy. And the less advantaged can cut back on discretionary spending to get through the lean years. Which means the greatest burden some manner of a graduated consumption tax falls on those best able to bear it.
Great idea. I don’t like the tariff, but at least it doesn’t violate a score of Constitutional rights as the income tax does.
I never got on board with the Fair Tax. Unless something has changed, it relied on silly pre-bates. A massive amount of work. And STILL have progressive effective tax rates.
Nothing wrong with tariffs. I don’t recall a lot of inflation when Trump squeezed China.
Regarding taxing ourselves, the only inherently fair option is consumption tax. Govt should not even know your income rate.
Spending is the real problem. If govt spending affects the rate of the tax on YOUR spending, then you are more likely to oppose wild govt spending. Today, half the population don’t need to care what feds spend because they pay zero net fed tax either way.
People call consumption tax regressive. Nonsense. The tax is entirely fair. Life isn’t.
For those who feel an unconstitutional federal need to address the unfairness of life... please, at least do so on the spending side and quit mucking up the tax side. And, technically, the state level is the only legit place to do such spending.
If three thousand dollars in income was the upper 3% of the population, then it would be more than $200,000 in today's dollars, not $95k. Let's check this with gold prices; in 1914, 3,000 dollars could buy you 150 ounces of gold. Today 150 ounces of gold is worth around $300,000. So yeah, $3,000 then was more like $2-300,000 today, which makes a lot more sense given we know that the initial income tax strategy was to target only a small number of high earners. Why the discrepancy? Because the government lies about the true rate of inflation/devaluation of our currency to minimize payouts to service and civil pensions and social security. Pretty much all of this inflation has happened in just the last fifty years or so, since we went off the gold standard.
Tariffs and reduce income taxes.